[Funding] iGene Accelerates Vaccine Development with Large-Scale Fundraising

Plan to Raise 60 Billion KRW Through Rights Offering... 45 Billion KRW Investment in Clinical Trials and R&D
Expect to Resolve Management Item Designation Issue Through Capital Expansion

[Asia Economy Reporter Hyungsoo Park] IGEN, developing a messenger ribonucleic acid (mRNA) type COVID-19 vaccine, has launched a large-scale fundraising effort. IGEN confirmed efficacy comparable to Moderna's COVID-19 vaccine through preclinical results and plans to proceed with full-scale clinical trials.

According to the Financial Supervisory Service on the 14th, IGEN will issue 4.2 million new shares through a rights offering followed by a general public offering of forfeited shares. The planned issue price per new share is 14,300 KRW, raising a total of 60 billion KRW. For every one existing share, 0.35 new shares will be allocated.

The lead underwriter, Mirae Asset Securities, introduced that IGEN is conducting efficacy evaluations of the COVID-19 vaccine at the preclinical stage and confirmed results comparable to Moderna's COVID-19 preventive vaccine preclinical experimental data in a neutralizing antibody efficacy evaluation test conducted last month.

◆ Encouraging results from preclinical efficacy evaluation = IGEN aims to enter the clinical phase as soon as it completes preclinical trials and produces clinical samples for the COVID-19 preventive vaccine under development.

The company stated, "The funds raised will be used as resources for domestic early and late-stage clinical trials scheduled to begin in the first half of this year," adding, "We will strive to secure K-vaccine sovereignty through rapid clinical progress."

IGEN aims to enter phase 1+2a clinical trials for the COVID-19 preventive vaccine (EG-COVID) in the first half of this year. The goal is to enter phase 2b+3 clinical trials by the end of this year. Among the funds raised through the capital increase, 17.7 billion KRW has been allocated first. If subsequent clinical trials are conducted overseas rather than domestically, additional clinical costs will be required. IGEN is also conducting multifaceted discussions to resolve some clinical costs by jointly researching with domestic large corporations or local overseas vaccine companies.

The mRNA vaccine developed by IGEN is one of the next-generation vaccine platforms. It has excellent preventive effects and relatively easy vaccine development against variant viruses. Since it can be developed as a customized vaccine, its scope can be expanded to cancer vaccines, attracting recent attention. The government has established a policy not to spare support for companies developing mRNA vaccines.

Jinhong Kook, a researcher at Korea Investment & Securities, explained, "The difference between IGEN's mRNA vaccine and existing mRNA vaccines lies in the delivery vehicle used to safely deliver mRNA into the body," adding, "Compared to existing mRNA vaccines, it will have advantages in safety as well as the ability to be stored refrigerated."

IGEN expects to receive marketing approval for the COVID-19 vaccine in 2023. Although it has excellent strengths in distribution and productivity, it cautioned that if other competing vaccines or therapeutics are developed by 2023, it could negatively impact IGEN's COVID-19 vaccine.

IGEN allocated 9 billion KRW to purchase mRNA production equipment essential for late-stage clinical trials of the mRNA-based COVID-19 preventive vaccine and commercial vaccine production and to establish facilities. It plans to establish a foundation to produce mRNA domestically without relying on overseas production. The plan is to first establish infrastructure to produce clinical samples needed for late-stage clinical trials and then expand production facilities in preparation for large-scale commercial production, progressing step-by-step through 2023.

◆ Financial indicators deteriorate due to various new drug developments = In addition to the COVID-19 vaccine, IGEN is researching and developing a shingles vaccine (EG-HZ), diabetic retinopathy treatment (EG-Mirotin), and myocardial ischemia/reperfusion injury treatment (EG-Myocin). The shingles vaccine has completed all processes of phase 1 clinical trial dosing and observation in Australia and is preparing the final report. The diabetic retinopathy treatment completed phase 2a clinical trials in Europe in February last year and subsequently conducted additional investigator-initiated trials domestically. The myocardial ischemia/reperfusion injury treatment has completed about 85% of phase 2 clinical trials and dosing processes domestically. The remaining dosing for subjects is expected to be completed by the end of the first half of this year.

Developing various new drugs incurs annual research and development costs exceeding 8 billion KRW. Due to long-term dedication to R&D, the financial condition is unstable. As of last year, the debt ratio was 244.4%, and the dependence on borrowings was 34.2%. IGEN applied for a special listing exception for technology growth companies and transferred from the KONEX market to the KOSDAQ market in 2015. Under the special conditions, it was not subject to management designation until 2018, but since the expiration of the special condition period from 2019, it has been subject to KOSDAQ market management designation and delisting criteria. IGEN may meet the criteria for 'pre-tax continuing business losses' and 'capital impairment/equity capital' by the end of this year. Completing the capital increase and expanding capital will reduce the possibility of being designated as a management item.

Since the company continues to operate at an operating loss, insufficient R&D funds must be borrowed or raised externally. Failure to raise funds in a timely manner may hinder smooth R&D progress.

The largest shareholder is CEO Wonil Yoo, holding 8.22% (972,860 shares). The combined shareholding of the largest shareholder and related parties is 13.5% (1,602,170 shares). The largest shareholder plans to participate in up to 30% of the allocated shares in the capital increase. Since funds are needed to participate in the capital increase, the participation rate may decrease depending on the scale of fund procurement. After completing the capital increase, the shareholding ratio of the largest shareholder and related parties may decrease to 10.64%.